On August 26, 2020, the SEC announced the adoption of amendments to the definitions of “accredited investor” and “qualified institutional buyer,” terms that loom very large in determining who may invest in private placements. The amendments are in line with the SEC’s previously stated intention of making private investments available to more investors and will, among other things:
- allow natural persons to qualify as accredited investors based upon various professional certifications, designations or credentials, including persons who hold Series 7 licenses;
- include as accredited investors, for purposes of investing in a fund, “knowledgeable employees” of the fund;
- treat as accredited investors LLCs, family offices and their family clients, and other entities owning $5 million of qualifying investments, as well as SEC- and state-registered investment advisors; and
- allow “spousal equivalents,” as well as legally recognized spouses, to pool finances to qualify as accredited investors.
The amendments will become effective 60 days following publication in the Federal Register.
A more detailed discussion of the amendments can be found at The Securities Edge, our securities and corporate governance blog. Please direct any questions or observations to Gunster securities law and corporate governance practice leader Bob Lamm.